Moving Negative Balance Forward
Hello all, I am a newer YNAB user, and am figuring it out for the most part. I have read through some threads and understand that negative balances do not and will not, at least in the foreseeable future, be able to automatically roll over to the next month. My question is not to debate that but ask help in a solution. Here's the problem:
My husband's regular paychecks are placed into YNAB, but his non-regular and travel checks are his to spend on his hobby. He likes to keep those checks as checks or cash until he is ready to spend the money (this has worked for us for over 20 years, no plans to change it now). I pay for what he needs with a credit card then take his check or cash to the bank. Sometimes it takes a few weeks to get to the bank as happened last month and the negative balance stayed in March. My credit card is not due until the beginning of May. My question is how do I move the negative balance forward until I have a chance to get to the bank? Do you just re-date the spending and make a memo to say when you really spent it? Do you go back to March and cover it when you actually put the money in the bank? The solutions I read all seemed very cumbersome for this problem. We have the money, just not where it can cover the cc immediately.
I just don't want anything to get missed, as almost happed recently. I don't like not adding the expense to my YNAB account because then my cc will be off.
Thanks for any help.
For the cash, create a cash account in YNAB to contain the cash. The checks should be entered when they are deposited.
He should not be spending money that isn't available to the budget, so get the checks deposited first. Until the money is in the account, those checks are worth about the same as a piece of paper.
Not sure why anyone would want to sit on money that's going to the bank anyway. It's not earning any interest.
nolesrule I don't want to change what has worked for a very long time. I am not new to handling my money or budgeting, I'm new to YNAB and am trying to make a problem better.
My husband asks for very few things in life. He likes clean clothes, drip coffee, and his comfy chair. He does not even really care if there is food available, he's quite easy to please, so no, I'm not going to ask him to change how he handles his extra checks.
I could add a cash account, but I try to keep this money as separate as possible from our regular income. The only reason I am asking for a solution is to keep my cc balance accurate within YNAB. We have the money, just not where it is easily accessible. And as for the interest, it is not worth the bother for this situation.
Vibrant and nolesrule , you are correct, change is difficult! You both have given me ideas to think about. I think my husband really likes to see the cold, hard cash he has worked for.
I understand the philosophy of YNAB, that is why I joined as it appeals to me and my money philosophy. I certainly don't want to have a monthly struggle, in any area, and this is a struggle.
Gold Rhythm Do you use a bank that has a phone app that allows for remote deposit?* If so, perhaps what you could do is continue holding onto the checks until you are ready to make the purchases, and do mobile deposits at the same time as you make the purchases. That way, you could enter it as income in YNAB and then immediately do a transaction where you spend that income.
*I bank with First Republic and, on a less frequent basis, Bank of America, and both allow for mobile deposit. It takes about 60 seconds to snap a photo of both sides of a check and upload it to the app, and the check is usually cleared within a single business day. I didn't realize this was even possible until very recently, and I've never gone back to the old way since!
This sounds like the same basic problem as I have with work expenses. For myself, I have a Work Expense category where I put all those charges, and it goes negative when I travel for work. I like this as it is a big red flag to ensure I don't forget about it. Those expenses are going to get repaid, it just won't happen til a few weeks after the trip, which sometimes drags into a new month. What I do in that case is fill it in with money from my buffer at the end of the previous month, and then reverse that in the next month. Then I wait til I get paid and transfer the money to Work Expense. This is a change from how YNAB used to work in previous versions, making it more difficult to run negative balances, which is understandable given the overall YNAB philosophy. In other words, the inconvenience is "by design", but if you really need to do it, you can work around it. IMHO, the bottom line is that you make it work for your needs, given you understand the reason why it was designed the way it was.
You're complicating things by treating this money as "special" and probably increasing your CC debt to boot! I mean look at the situation when the dust settles (assume your CC Payment category matches the account balance to start with for ease of illustration):
- Your CC account is larger because of the work expense, but the CC Payment category remains the same. So now you cannot afford to pay the entire CC bill.
- Husband wants to spend on the Hobby, so this amount of money has to wind up in the Hobby category to allow that.
- In other words, the bottom line is that your husband's hobby is being funded by an increase in CC debt.
If you don't want to increase debt, you'll have to budget "normal" money to the CC Payment category (enabling a full payment). That's cool if you do that, but a bit convoluted -- why not just budget that "normal" money to the Hobby to start with? This lets the reimbursement money go back to the CC Payment category (avoiding the debt increase).
Here's are the "normal" reimbursement budget workflows (which differ in whether interaction with the CC Payment category is automatic or manual):
- Pre-fund the Work Expense category with your money (e.g., part of an Emergency fund) so any interaction with the CC Payment category is automatic. (I.e., nothing to do in the budget, just enter the inflow when you make the deposit.) These funds are obviously available to reallocate back for use in an emergency if no reimbursement is pending. (I'd make a Goal for the pre-fund amount so you don't forget where the "we're square" point is.)
- Let the Work Expense category go negative. If the Work Expense category ever goes positive, just move that money to the CC Payment category.
(The transaction is always categorized back to the Work Expense category in either case.)
Simple, right? Assuming you budget for the Hobby as a normal, typical expense, things are pretty easy.
However, if you insist on your current practice (i.e., debt growth), here's what I suggest:
- Categorize the reimbursements as Inflow:To Be Budgeted and immediately budget that money to the Hobby category.
- You still have the little issue of increased CC debt, unfortunately. You'll have to budget for that out of normal money directly to the CC Payment category before the bill is due.
- The timing of the reimbursement deposit only impacts the Hobby spending. Again, the timing of the separate debt reduction is totally up to you.
As I said, I would switch to making the Hobby a normal expense as it's much easier to see what's going on. Your budget, however, so good luck with whatever you decide!
kevman479 Not a fan of "uncashed check" account. The money still belongs to the checkwriter until it's depsosited, and that's how it's different from a savings account.
Hadn't thought about it that way. I'm going to rethink this and talk to my wife about it.
The idea of having a separate cash or tracking account in YNAB associated with a separate savings account at the bank is something to consider. My bank does offer mobile deposit. I think combining the two may work out in our situation. If not, as nolesrule mentioned, maybe I'll just keep it completely separate from everything else and not associated with YNAB.
There are many thoughts on this, and all have some good points. For us, we've never bounced a check and we pay our cc off each month, so I'm not increasing our debt and really not worried about check bouncing. Mine was simply a logistical problem. Our bank is not just around the corner, at a minimum it takes 2 hrs from my day to drive there and back. If I've already cashed the check I still have to drive to the bank to deposit the cash. Which is what created the original problem of I didn't deposit the money until April and I spent it in March, however the cc isn't due until May.
Currently I feel that I need to reconcile my accounts at the end of the month and again when the cc is actually due so that I don't miss any transactions. I do keep a buffer available, but it seems like a lot of back and forth movement.
Gold Rhythm said:
For us, we've never bounced a check and we pay our cc off each month, so I'm not increasing our debt and really not worried about check bouncing. Mine was simply a logistical problem. Our bank is not just around the corner, at a minimum it takes 2 hrs from my day to drive there and back. If I've already cashed the check I still have to drive to the bank to deposit the cash. Which is what created the original problem of I didn't deposit the money until April and I spent it in March, however the cc isn't due until May.
Your cash flow may be okay, but it's the allocation that's screwed up. You are paying for work expenses on a CC, but when the money comes back from the work expenses, you are not allocating that money to pay back the CC. Instead, you are using the money as spending money. If all of the money ends up coming back into the budget via deposit, that's fine, because it's fungible (though you still have to manage the CC payment category). But if some of the money never makes it back into the budget, then you are essentially taking cash advances from the credit card, and it's a draw on your budget. That;'s what you need to watch out for.